RBI releases final guidelines on project finance

The Reserve Bank of India (RBI) has issued its final guidelines on project finance norms. Under new guidelines lenders have to maintain a general provision of 1.25 per cent (earlier 1 per cent) at the construction phase of a commercial real estate project and 1 per cent (earlier 0.75 per cent) at the operational phase. In commercial real estate-residential housing projects, the provision requirements will be 1 per cent and 0.75 per cent. For all others, provision of 1 per cent need to be maintained during construction and 0.4 per cent in operational phase. Moreover, an additional specific provision of 0.375 per cent for infrastructure project loans and 0.5625 per cent for non-infrastructure project loans has to be maintained. It can be reversed upon the commencement of the commercial operation. The guidelines will come into effect from October 2025. The new guidelines will not apply to the projects whose financial closure has already been achieved.